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Zynga Reports First Quarter 2013 Financial Results



Zynga Reports First Quarter 2013 Financial Results

SAN FRANCISCO, April 24, 2013 (GLOBE NEWSWIRE) -- Zynga Inc. (Nasdaq:ZNGA),
the world's leading provider of social game services, today announced
financial results for the quarter ended March 31, 2013.

    * Q1 2013 revenue of $264 million, down 18% year-over-year, and bookings
      of $230 million, down 30% year-over-year
    * Q1 2013 net income of $4 million and adjusted EBITDA of $29 million
    * Q1 2013 diluted GAAP EPS of $0.00 and non-GAAP EPS of $0.01

"We are encouraged by the strong execution from our teams and the breakout hit
performance of FarmVille 2, which captures the imagination of nearly 40
million players every month," said Mark Pincus, CEO and Founder, Zynga. "2013
will continue to be a transition year as we face the challenging environment
on the web and invest in developing the leading franchises and network across
web and mobile platforms and offer our 253 million monthly players a connected
experience that can follow them from work to school to home and anywhere in
between."

Financial Highlights (in thousands, except per share data)
                                                  
                                    Quarter ended
GAAP Results                        Mar 31, 2013 Mar 31, 2012
Revenue                              $ 263,589    $ 320,972
Net income (loss)                    $ 4,133      $ (85,351)
Diluted net income (loss) per share  $ 0.00       $ (0.12)
                                                  
Non-GAAP Results                                  
Bookings                             $ 229,815    $ 329,164
Adjusted EBITDA                      $ 28,735     $ 86,752
Non-GAAP net income                  $ 9,105      $ 47,049
Non-GAAP earnings per share          $ 0.01       $ 0.06

Product Highlights

  * Zynga continued to demonstrate the power of its franchises, and the
    combined bookings for FarmVille and FarmVille 2 grew year-over-year.
  * FarmVille 2, in particular, was a breakout hit with daily audience
    engagement and bookings exceeding the company's expectations.
  * Zynga launched standalone player logins for Zynga.com, creating a
    destination for people looking to play more games and connect with
    other players around the world.
  * Zynga showed the power of its audience in Q1 by cross-promoting
    Playdemic's Village Life, a third-party web game that is part of the Zynga
    Partners publishing program; taking the game to 6.5 million MAU.
  * Subsequent to Q1 2013, Zynga launched its first suite of real money gaming
    (RMG) offerings, ZyngaPlusPoker and ZyngaPlusCasino, in the UK through its
    partnership with bwin.party digital entertainment plc. Launching the
    download and web versions of Zynga's real money games for play in the UK
    is an exciting move to bring players the real money games they have been
    asking for. These offerings are the first step toward realizing Zynga's
    long-term vision of bringing players the next generation of real money
    games on multiple platforms in regulated markets.

Business Highlights

  * Daily active users (DAUs) decreased from 65 million in the first quarter
    of 2012 to 52 million in the first quarter of 2013, down 21%
    year-over-year. On a consecutive quarter basis, DAUs were down 8% from 56
    million in the fourth quarter of 2012.
  * Monthly active users (MAUs) decreased from 292 million in the first
    quarter of 2012 to 253 million in the first quarter of 2013, down 13%
    year-over-year. On a consecutive quarter basis, MAUs were down 15% from
    298 million in the fourth quarter of 2012.
  * Monthly unique users (MUUs) decreased from 182 million in the first
    quarter of 2012 to 150 million in the first quarter of 2013, down 18%
    year-over-year. On a consecutive quarter basis, MUUs were down 10% from
    167 million in the fourth quarter of 2012.
  * Average daily bookings per average DAU (ABPU) decreased from $0.055 in the
    first quarter of 2012 to $0.049 in the first quarter of 2013, down 11%
    year-over-year. On a consecutive quarter basis, ABPU was down 2% from
    $0.051 in the fourth quarter of 2012.
  * Monthly Unique Payers (MUPs) decreased from 3.5 million in the first
    quarter of 2012 to 2.5 million in the first quarter of 2013, down 30%
    year-over-year. On a consecutive quarter basis MUPs were down 14% from 2.9
    million in the fourth quarter of 2012.
  * Zynga launched two new titles during the first quarter of 2013, Zynga
    Slots on web-based platforms and What's The Phrase on mobile platforms.
  * As of March 31, 2013, Zynga had three of the top 10 games on Facebook,
    based on DAUs as reported by AppData, including some of its most
    established titles, Words With Friends, Zynga Poker, and FarmVille 2.

Financial Summary

  * Revenue:  Revenue was $263.6 million for the first quarter of 2013, down
    18% compared to the first quarter of 2012 and a decrease of 15% compared
    to the fourth quarter of 2012. Online game revenue was $229.6 million, a
    decrease of 22% compared to the first quarter of 2012 and a decrease of
    16% compared to the fourth quarter of 2012. Advertising revenue was $34.0
    million, an increase of 21% compared to the first quarter of 2012 and a
    decrease of 8% compared to the fourth quarter of 2012.
  * Bookings:  Bookings were $229.8 million for the first quarter of 2013, a
    decrease of 30% compared to the first quarter of 2012 and a decrease of
    12% compared to the fourth quarter of 2012.
  * Net income (loss): Net income was $4.1 million for the first quarter of
    2013 compared to a net loss of $85.4 million for the first quarter of
    2012. Net income for the first quarter of 2013 included $29.9 million of
    stock-based expense compared to $133.9 million of stock-based expense
    included in the first quarter of 2012.
  * Adjusted EBITDA: Adjusted EBITDA was $28.7 million for the first quarter
    of 2013 compared to $86.8 million for the first quarter of 2012 and $45.0
    million in the fourth quarter of 2012.
  * Non-GAAP net income: Non-GAAP net income was $9.1 million for the first
    quarter of 2013, down from $47.0 million in the first quarter of 2012 and
    up from $6.9 million in the fourth quarter of 2012.
  * EPS: Diluted EPS was $0.00 for the first quarter of 2013 compared to
    ($0.12) for the first quarter of 2012 and ($0.06) for the fourth quarter
    of 2012.
  * Non-GAAP EPS: Non-GAAP EPS was $0.01 for the first quarter of 2013
    compared to $0.06 for the first quarter of 2012 and flat when compared to
    the fourth quarter of 2012.
  * Cash and cash flow:  As of March 31, 2013, cash, cash equivalents and
    marketable securities were approximately $1.67 billion, compared to $1.65
    billion as of December 31, 2012. Cash flow from operations was $26.4
    million for the first quarter of 2013, compared to $78.8 million for the
    first quarter of 2012. Free cash flow was $23.2 million for the first
    quarter of 2013 compared to $43.8 million for the first quarter of 2012.
  * Share Repurchase Program: During the three months ended March 31, 2013,
    Zynga repurchased approximately 1.0 million shares of common stock for
    approximately $2.5 million under its stock repurchase program. From
    inception of the program Zynga has repurchased a total of approximately
    6.0 million shares for $14.3 million. The remaining authorized amount of
    stock repurchases that may be made under this plan was approximately $186
    million as of March 31, 2013.
  * Repayment of Debt: In April 2013, we repaid our long-term debt of $100
    million and currently have no debt outstanding.

Outlook

Zynga's outlook for the second quarter of 2013 is as follows:

  o Revenue is projected to be in the range of $225 million to $235 million.
  o Net loss is projected to be in the range of $36.5 million to $26.5
    million.
  o EPS is projected to be in the range of ($0.05) to ($0.03), based on a
    share count of approximately 785 million to 795 million shares.
  o Bookings are projected to be in the range of $180 million to $190 million.
  o Adjusted EBITDA is projected to be in the range of ($10) million to break
    even.
  o Non-GAAP EPS is projected to be in the range of ($0.04) to ($0.03), based
    on a share count of approximately 785 million to 795 million shares.

For full year 2013:

  * Adjusted EBITDA margin (adjusted EBITDA as a percentage of bookings) is
    projected to be in the range of 0% to 10%.

Disclosure Using Social Media Channels

Zynga currently announces material information to its investors using SEC
filings, press releases, public conference calls and webcasts. Zynga uses
these channels as well as social media channels to announce information about
the company, games, employees and other issues. Given the recent SEC guidance
regarding the use of social media channels to announce material information to
investors, Zynga is notifying investors, the media, its players and others
interested in the company that in the future, it might choose to communicate
material information via social media channels or, it is possible that
information it discloses through social media channels may be deemed to be
material. Therefore, Zynga encourages investors, the media, players and others
interested in Zynga to review the information posted on the company blog
(http://zyngablog.typepad.com/zynga/) and the company Facebook site
(https://facebook.com/Zynga) and the company twitter account
(https://twitter.com/Zynga). Investors, the media, players or other interested
parties can subscribe to the company blog and twitter feed at the addresses
listed above. Any updates to the list of social media channels Zynga will use
to announce material information will be posted on the Investor Relations page
of the company's website at http://investor.zynga.com.

Conference Call Details:

Zynga will host a conference call today, April 24, 2013, at 2:00 pm Pacific
Time (5:00 pm Eastern Time) to discuss financial results. A live webcast of
the conference call and supplemental slides will be accessible from the
Investor Relations page of the company's website at http://investor.zynga.com
and a replay will be archived and accessible at the same website after the
call.

About Zynga Inc.

Zynga Inc. (Nasdaq:ZNGA) is the world's leading provider of social game
services with 253 million monthly active users playing its games, which
include Zynga Poker, Words With Friends, Scramble With Friends, Gems With
Friends, Draw Something, FarmVille 2, ChefVille, CityVille, Bubble Safari and
Ruby Blast. Zynga's games are available on a number of global platforms,
including Facebook, Zynga.com, Google+, Tencent, Apple iOS and Google Android.
Zynga is headquartered in San Francisco, California.  Learn more about Zynga
at http://blog.zynga.com or follow Zynga on Twitter and Facebook. 

The Zynga Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=11743

Forward-Looking Statements

This press release contains forward-looking statements relating to, among
other things, our outlook for second quarter 2013 revenue, net loss, EPS,
weighted average diluted share count, bookings, adjusted EBITDA, non-GAAP EPS
and non-GAAP weighted average diluted share count; our outlook for full year
2013 adjusted EBITDA margin; our ability to remain profitable on an adjusted
EBITDA basis; our future game launches; our ability to grow our franchises on
mobile and web and the success of our games and network generally; our ability
to build and expand our network, including creating and building a mobile
network and the success of that network; our ability to successfully launch,
promote and monetize games on our network; our ability to successfully launch
offerings in real money gaming on multiple platforms in available markets; our
ability to transition our web franchises to mobile and create new
multiplatform franchises; our ability to launch successful new multiplatform
games and hit games for web and mobile generally; our ability to rationalize
our product pipeline and reduce the cost of operating live games; our ability
to reduce indirect costs; our proposed share repurchase program; and the
market opportunity in the social games market, including the mobile market and
the advertising market. Forward-looking statements often include words such as
"outlook," "projected, " "intends," "will," "anticipate," "believe," "target,"
"expect," and statements in the future tense are generally forward-looking
statements. The achievement or success of the matters covered by such
forward-looking statements involves significant risks, uncertainties and
assumptions. Our actual results could differ materially from those predicted
or implied, and reported results should not be considered as an indication of
our future performance. Factors that could cause or contribute to such
differences include, but are not limited to, our relationship with Facebook or
changes in the Facebook platform, our relationship with and/or agreements with
iOS and or Android platform providers and/or changes to the Android or iOS
platforms, our ability to launch new games in a timely manner and monetize
these games effectively on the web and on mobile, our ability to launch games
that are successful across platforms, our ability to continue to maintain
bookings for franchise games, despite increasing decay rates for games
generally, our ability to control and reduce expenses, our ability to
anticipate and address technical challenges that may arise, competition,
changing interests of players, our relationship with bwin.party, our ability
to enter the real money gaming market and monetize opportunities in the real
money gaming category, our exposure to illegitimate credit card activity and
other security risks, regulatory, gaming or licensing issues, intellectual
property disputes or other litigation, asset impairment charges, our ability
to retain key employees, acquisitions by us and changes in corporate strategy
or management.

More information about factors that could affect our operating results is
included under the captions "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in our Annual
Report on Form 10-K for the full year ended December 31, 2012, copies of which
may be obtained by visiting our Investor Relations web site at
http://investor.zynga.com or the SEC's web site at www.sec.gov. Undue reliance
should not be placed on the forward-looking statements in this release, which
are based on information available to us on the date hereof. There is no
guarantee that the circumstances described in our forward-looking statements
will occur. We assume no obligation to update such statements.  The results we
report in our Quarterly Report on Form 10-Q for the three months ended March
31, 2013 could differ from the preliminary results we have announced in this
press release.

Non-GAAP Financial Measures:

We have provided in this release non-GAAP financial information including
bookings, adjusted EBITDA, non-GAAP net income, non-GAAP EPS, free cash flow
and adjusted EBITDA margin, as a supplement to the consolidated financial
statements, which are prepared in accordance with generally accepted
accounting principles ("GAAP"). Management uses these non-GAAP financial
measures internally in analyzing our financial results to assess operational
performance and liquidity. The presentation of this financial information is
not intended to be considered in isolation or as a substitute for the
financial information prepared in accordance with GAAP. We believe that both
management and investors benefit from referring to these non-GAAP financial
measures in assessing our performance and when planning, forecasting and
analyzing future periods. We believe these non-GAAP financial measures are
useful to investors because they allow for greater transparency with respect
to key financial metrics we use in making operating decisions and because our
investors and analysts use them to help assess the health of our business. We
have provided reconciliations between our historical and second quarter 2013
outlook for non-GAAP financial measures to the most directly comparable GAAP
financial measures. However, we have not provided reconciliation of our full
year 2013 adjusted EBITDA margin (adjusted EBITDA as a percentage of bookings)
outlook to a comparable operating income (loss) margin (operating income
(loss) as a percentage of revenues) for full year 2013 because certain inputs
necessary to accurately project revenue (including the projected mix of
virtual goods sold in our games, the projected estimated average lives of
durable virtual goods for our games and visibility into projected bookings)
are not in our control and cannot be reasonably projected for the full year
due to variability from period to period caused by changes in player behavior
and other factors. As revenue is a necessary input to determine this
comparable GAAP metric, we are not able to provide the reconciliation.

Some limitations of bookings, adjusted EBITDA, non-GAAP net income, non-GAAP
EPS, free cash flow and adjusted EBITDA margin are:

  * Adjusted EBITDA and non-GAAP net income (loss) do not include the impact
    of stock-based expense and restructuring expense;
  * Bookings, adjusted EBITDA and non-GAAP net income (loss) do not reflect
    that we defer and recognize online game revenue and revenue from certain
    advertising transactions over the estimated average life of virtual goods
    or as virtual goods are consumed;
  * Adjusted EBITDA does not reflect income tax expense;
  * Adjusted EBITDA does not include other income and expense, which includes
    foreign exchange gains and losses, and interest income;
  * Adjusted EBITDA excludes both depreciation and amortization of intangible
    assets, while non-GAAP net income excludes amortization of intangible
    assets from acquisitions. Although depreciation and amortization are
    non-cash charges, the assets being depreciated and amortized may have to
    be replaced in the future;
  * Adjusted EBITDA and non-GAAP net income (loss) do not include gains and
    losses associated with legal settlements;
  * Non-GAAP EPS gives effect to all dilutive awards based on the treasury
    stock method;
  * Free cash flow is derived from net cash provided by operating activities
    less cash spent on capital expenditures, and removing the excess income
    tax benefits or costs associated with stock-based awards; and
  * Other companies, including companies in our industry, may calculate
    bookings, adjusted EBITDA, non-GAAP net income, non-GAAP EPS and free cash
    flow differently or not at all, which will reduce their usefulness as a
    comparative measure.

Because of these limitations, you should consider bookings, adjusted EBITDA,
non-GAAP net income (loss), non-GAAP EPS,  free cash flow and adjusted EBITDA
margin, along with other financial performance measures, including revenue,
net income (loss) and our other financial results presented in accordance with
GAAP. See the GAAP to non-GAAP reconciliations below for further details.

ZYNGA INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
                                                            
                                              March 31,    December 31,
                                              2013         2012
Assets                                                      
Current assets:                                             
Cash and cash equivalents                      $ 426,251    $ 385,949
Marketable securities                         842,432      898,821
Accounts receivable                           92,518       106,327
Income tax receivable                         5,650        5,607
Deferred tax assets                           26,633       30,122
Restricted cash                               785          28,152
Other current assets                          29,742       29,392
Total current assets                          1,424,011    1,484,370
                                                            
Long-term marketable securities               402,721      367,543
Goodwill                                      208,012      208,955
Other intangible assets, net                  30,372       33,663
Property and equipment, net                   442,293      466,074
Other long-term assets                        15,427       15,715
Total assets                                   $ 2,522,836  $ 2,576,320
                                                            
Liabilities and stockholders' equity                        
Current liabilities:                                        
Accounts payable                               $ 25,768     $ 23,298
Other current liabilities                     102,381      146,883
Deferred revenue                              302,722      338,964
Total current liabilities                     430,871      509,145
                                                            
Long-term debt                                100,000      100,000
Deferred revenue                              10,509       8,041
Deferred tax liabilities                      12,653       24,584
Other non-current liabilities                 105,303      109,047
Total liabilities                              659,336      750,817
                                                            
Stockholders' equity:                                       
Common stock and additional paid-in capital    2,762,756    2,725,605
Treasury stock                                 --           (295,113)
Accumulated other comprehensive income (loss)  (2,232)      (1,447)
Accumulated deficit                            (897,024)    (603,542)
Total stockholders' equity                    1,863,500    1,825,503
Total liabilities and stockholders' equity     $ 2,522,836  $ 2,576,320

 
 
ZYNGA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
                                                                    
                                                        Three Months Ended
                                                        March 31,
                                                        2013       2012
Revenue:                                                            
Online game                                              $ 229,566  $ 292,780
Advertising                                             34,023     28,192
Total revenue                                           263,589    320,972
Costs and expenses:                                                 
Cost of revenue                                         69,394     90,122
Research and development                                 129,181    186,876
Sales and marketing                                      27,307     56,837
General and administrative                               42,640     72,715
Total costs and expenses                                 268,522    406,550
Loss from operations                                     (4,933)    (85,578)
Interest income                                          1,163      1,291
Other income (expense), net                              (863)      (1,142)
Income (loss) before income taxes                        (4,633)    (85,429)
Benefit from income taxes                                8,766      78
Net income (loss)                                        $ 4,133    $ (85,351)
                                                                    
Net income (loss) per share:                                        
Basic                                                    $ 0.01     $ (0.12)
Diluted                                                  $ 0.00     $ (0.12)
                                                                    
Weighted average common shares used to compute net                  
income (loss) per share:
Basic                                                   779,949    707,693
Diluted                                                 827,526    707,693
                                                                    
Stock-based expense included in the above line items:               
Cost of revenue                                          $ 1,933    $ 6,818
Research and development                                20,900     78,146
Sales and marketing                                     1,413      12,915
General and administrative                              5,676      35,972
Total stock-based expense                                $ 29,922   $ 133,851

 
 
ZYNGA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
                                                                   
                                                        
                                                       Three Months Ended
                                                       March 31,
                                                       2013       2012
Operating activities                                               
Net income (loss)                                       $ 4,133    $ (85,351)
                                                                   
Adjustments to reconcile net loss to net cash provided             
by operating activities:
Depreciation and amortization                           32,061     29,398
Stock-based expense                                     29,922     133,851
Accretion and amortization on marketable securities     4,856      2,836
Loss from sales of investments, assets and other, net   1,207      12
Tax benefits from stock based awards                    1,657      -- 
Excess tax benefits from stock-based awards             (1,657)    -- 
Deferred income taxes                                   (8,591)    (1,286)
Changes in operating assets and liabilities:                       
Accounts receivable, net                                13,809     (5,617)
Income tax receivable                                   (43)       14,242
Other assets                                            848        (4,818)
Accounts payable                                        2,470      (283)
Deferred revenue                                        (33,774)   8,192
Other liabilities                                       (20,453)   (12,359)
Net cash provided by operating activities               26,445     78,817
                                                                   
Investing activities                                               
Purchase of marketable securities                       (278,719)  (964,741)
Sales of marketable securities                          98,615     16,747
Maturities of marketable securities                     195,068    116,126
Acquisition of property and equipment                   (4,924)    (34,994)
Business acquisitions, net of cash acquired             --         (182,164)
Restricted cash                                         167        (224,952)
Other investing activities, net                         (803)      (3,177)
Net cash provided by (used in) investing activities     9,404      (1,277,155)
                                                                   
Financing activities                                               
Repurchase of common stock                              (2,432)    -- 
Taxes paid related to net share settlement of equity    (344)      (23,500)
awards
Proceeds from exercise of stock options and warrants    2,393      533
Proceeds from employee stock purchase plan              3,506      -- 
Excess tax benefits from stock-based awards             1,657      -- 
Net cash provided by (used in) financing activities     4,780      (22,967)
                                                                   
Effect of exchange rate changes on cash and cash        (327)      36
equivalents 
                                                                   
Net increase (decrease) in cash and cash equivalents    40,302     (1,221,269)
Cash and cash equivalents, beginning of period          385,949    1,582,343
                                                                   
Cash and cash equivalents, end of period                $ 426,251  $ 361,074

 
 
ZYNGA INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(In thousands, except per share data, unaudited)
                                                                    
                                                         
                                                        Three months ended
                                                        March 31,
                                                        2013       2012
Reconciliation of Revenue to Bookings                               
Revenue                                                  $ 263,589  $ 320,972
Change in deferred revenue                               (33,774)   8,192
Bookings                                                 $ 229,815  $ 329,164
Reconciliation of Net Income (Loss) to Adjusted EBITDA              
Net income (loss)                                        $ 4,133    $ (85,351)
Benefit from income taxes                                (8,766)    (78)
Other income (expense), net                              863        1,142
Interest income                                          (1,163)    (1,291)
Restructuring expense                                    5,459      -- 
Legal settlements                                        --         889
Depreciation and amortization                            32,061     29,398
Stock-based expense                                      29,922     133,851
Change in deferred revenue                               (33,774)   8,192
Adjusted EBITDA                                          $ 28,735  $ 86,752
Reconciliation of Net Income (Loss) to Non-GAAP Net                 
Income
Net income (loss)                                        $ 4,133    $ (85,351)
Stock-based expense                                      29,922     133,851
Amortization of intangible assets from acquisitions      3,658      6,951
Change in deferred revenue                               (33,774)   8,192
Restructuring expense                                    5,459      --  
Legal settlements                                        --         889
Tax effect of non-GAAP adjustments to net loss           (293)      (17,483)
Non-GAAP net income                                      $ 9,105   $ 47,049
Reconciliation of GAAP Diluted Shares to Non-GAAP                   
Diluted Shares                                                      
GAAP diluted shares                                     827,526    707,693
Other dilutive equity awards                            --         135,993
Non-GAAP diluted shares^(1)                             827,526    843,686
                                                                    
Non-GAAP earnings per share                              $ 0.01     $ 0.06
                                                                    
Reconciliation of Net Cash Provided by Operating                    
Activities to Free Cash Flow
Net cash provided by operating activities                $ 26,445   $ 78,817
Acquisition of property and equipment                    (4,924)    (34,994)
Excess tax benefits from stock-based awards              1,657      -- 
Free cash flow                                           $ 23,178   $ 43,823
                                                                    
Reconciliation of GAAP to Non-GAAP (Provision for)                  
Benefit from Income Taxes
GAAP benefit from income taxes                           $ 8,766    $ 78
Stock-based expense                                      (1,669)    (15,612)
Amortization of intangible assets from acquisitions      (204)      (811)
Change in deferred revenue                               1,884      (956)
Restructuring expense                                    (304)      -- 
Legal settlements                                        --         (104)
Non-GAAP (provision for) benefit from income taxes       $ 8,473    $ (17,405)
 
(1)  Includes the effect of all dilutive awards based
on the treasury stock method.

 
 
ZYNGA INC.
RECONCILIATION OF GAAP TO NON-GAAP SECOND QUARTER 2013 OUTLOOK
(In thousands, except per share data)
                                                      
                                                     Second Quarter 2013 
Reconciliation of Revenue to Bookings                 
Revenue range                                        $ 225,000 – 235,000
Change in deferred revenue                           (45,000)
Bookings range                                       $ 180,000 – 190,000
                                                      
Reconciliation of Net Loss to Adjusted EBITDA         
Net loss range                                       $ (36,500) – (26,500)
Provision for income taxes                           4,000
Other expense, net                                   3,500
Interest income                                      (1,000)
Depreciation and amortization                        32,000
Stock-based expense                                  33,000
Change in deferred revenue                           (45,000)
Adjusted EBITDA range                                $ (10,000) – 0
                                                      
Reconciliation of Net Loss to Non-GAAP Net Loss       
Net loss range                                       $ (36,500) – (26,500)
Stock-based expense                                  33,000
Amortization of intangible assets from acquisitions  3,000
Change in deferred revenue                            (45,000)
Tax effect of non-GAAP adjustments to net loss       15,500 – 13,500
Non-GAAP net loss range                              $ (30,000) – (22,000)
                                                      
                                                     785,000 – 795,000
GAAP and Non-GAAP diluted shares                      
                                                      
Net loss per share range                             $ (0.05) – $ (0.03)
Non-GAAP net loss per share range                    $ (0.04) – $ (0.03)

CONTACT: Investors - Krista Bessinger
         415-339-5266
         investors@zynga.com
        
         Press - Stephanie Hess
         415-503-0303
         press@zynga.com

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